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Could Regulation Put an End to Facebook’s Dominance?

August 21, 2019

Could Regulation Put an End to Facebook’s Dominance?

A recent report released revealed that Facebook was planning to Acquire Houseparty. The news was released within an article published by The New York Times. The article raised questions around Facebook’s dominance of social media, which Facebook maintains through acquiring competitors, the thing that has raised many concerns among regulatory groups.

After its launch in 2004 by Mark Zuckerberg, Facebook has grown to an empire, generating billions of dollars annually. Facebook acquired and maintained such high revenues and position in the market by purchasing popular apps such as WhatsApp, Instagram, Oculus VR, and Masquerade (MSQRD).

Among the various aspects discussed in the article, was that in 2018, Facebook sought to acquire Houseparty, which is a multi-participant live-streaming app. Houseparty was launched in 2016, by founders of Meerkat; a former live-streaming pioneer app.

The New York Times explained that serious discussions to buy Houseparty was held by executives last December. Facebook’s main intention to buy the app was to acquire the young audience under the age of 24, which were the main users of Houseparty. This is mainly because Facebook is demanding younger users, as its members are getting older. However, after weeks of discussion acquisition talks were abandoned, as Facebook executives feared it would “draw unwelcome federal government scrutiny to Facebook”.

This revelation clearly shows how Facebook deals with competition, especially from apps in the early stages of rising popularity, which is the stage where Facebook usually makes its acquisition offers.

Facebook has previously used an app called Onavo to gather information on competitors. Facebook acquired the app in 2013. Onavo collects usage data of applications from customers, which assesses the number of people downloading certain apps, and how often they are used. Facebook has however recently withdrawn its reliance on Onavo, because of privacy concerns.

In this aspect, it is clear that Facebook saw Houseparty as a competitor, and a potential threat, especially that back in 2017; it worked on launching its own replica of Houseparty, called Bonfire, which was discarded as a project in May. 

The fear over regulatory scrutiny, in addition to the shutdown of Onavo by Facebook earlier this year following criticism, could potentially play a role in making Facebook more vulnerable to competition, and thus reduce its control in the sector, opening more opportunities for other platforms.

This debate comes again to sight as tech giants including Facebook face rising antitrust scrutiny, from Washington and beyond where recently, the Department of Justice declared that it will be opening an antitrust review of online platforms that dominate the market. In addition to that, Facebook disclosed that the Federal Trade Commission is probing it over antitrust concerns.

Facebook is clearly paying considerate attention to regulation and oversight, and working accordingly. This is already observed in Facebook’s intentions to further integrate the apps it owns, which is seen by many as a defensive move to avoid any potential break-up of the company.

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